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24% Of Us Pay No Federal Income Tax
8 March 2007And actually that is quite low for the country, we in Connecticut rank 48th. I promised you I would find something we are not in the top ten for.
Only two states have lower percentages, Massachusetts and Alaska with 24 and 20% respectively. This means that 1 out of every 4 potential taxpayers in Connecticut do not pay taxes. Nationally the figure is 32% with the highest being Mississippi at 43% and Louisiana at 40%. All data from the Tax Foundation.
Alaska is low due to their oil wealth, and Massachusetts is very close to being tied with us and the reason is we are both blue states, we like it.
I can not find the percentage of Connecticut residents who don’t pay Connecticut income tax that does not seem to be public knowledge, but I suspect it is around 24% or a bit higher.
Nationally we hit a low of 16% in 1968 and rose to a high of 32% just last year. It has been a very steady rise except for the 1978 to 1983 period.
Nationally we have a built an entitled class of approximately 32% or 43,362,718 non taxpayers who quite frankly have no reason to vote for tax reform or a reduction in taxes, the system works just fine for them. While the rest of us pay all the taxes.
Taxes are income re-distribution they take from one segment of the population and give to another. They can be used to cause social change, rebates for hybrids or to punish such as the so-called sin taxes on smoking and drinking. But they always cause people to change their behavior, the presence of taxes is always a consideration when we move money, whether we are buying a car or investing in bonds versus stocks. Taxes make our money less efficient, first because we have to pay taxes on it and second because it changes our behavior in spending, saving and investing. Taxes never increase the wealth of a people when taken as a whole.
Taxes also have a dis-incentive to wealth creation. A person in subsidized housing with an income limit has little incentive to work harder, get more education or try for a better job if it means they will lose their subsidized housing. As written earlier in this blog we pay a marginalized 40% on each additional dollar we make, if my gas and car costs or other costs are high working that additional hour is discouraged by taxation, and the nation is poorer for it. The higher the tax rate the greater the dis-incentive to make more money, thus at some point for every additional percent taxes are raised a smaller additional percent of tax revenue is realized.
Approximately 14% of the Connecticut workforce is government employed, add the 24% on and we have approximately 38% of our population that benefits from taxes. It is not hard to see why we are in the mess we are in both on the state and federal levels. Take states like Mississippi at 43% and Louisiana at 40% and assume a government employment rate of 14% and the entitled classes are 58% and 54%, OUCH! No wonder those states are the constant basket cases of the country.
The effects of high taxation and low participation in tax paying are demonstrated quite literally with actual examples here in the United States. It does nothing good, it creates voting classes with no incentive to reform, to improve or take risks.
A result is the middle class is stressed, the lower incomes don’t pay taxes, the higher incomes pay taxes with a lower percent of their disposable income and don’t feel the effects quite as vibrantly as the middle class. Welcome to the middle class squeeze, where we make more than we ever have but feel less secure then our parents.
Whereas the middle class pays the taxes and still has to pay for life’s requirements with little to no government programs for assistance.
This can not continue and won’t. The answer is not to increase taxes on the wealthy, they can and do vote with their feet, capital flees to the place of least regression. Now you know what “progressive” stand for. And governments will always provide tax breaks for the wealthy, even governments realize that at some point we need jobs and the wealth creators must be invited in, Cuba, China and the old Soviet Union prove this point.
The question is at what point do our duly elected officials realize it? No clue has this Republican Governor and both of the Democrat Houses where that point is, I think it has passed. And the evidence is in our economic performance compared with other states.
4 Responses to “24% Of Us Pay No Federal Income Tax”
March 8th, 2007 at 4:26 pm
So why is our income tax around, maybe its because our national debt, 8 trillion of which has been racked up under just 3 of our 43 presidents; Reagan, Bush, and Bush. The annual interest on the debt already amounts to 40% of all the personal income taxes we pay.
March 9th, 2007 at 2:08 am
Everybody should pay taxes, no matter how little they make. Only then will all our citizens be fully invested in the fiscal management of our country and state. To have a group that does not suffer even a bit under taxes is to create a voting class with goals that are at odds with essence of our country.
September 4th, 2007 at 8:49 am
[…] that reaps the reward: That would be the 24% of us that pay NO income tax. And that would be the Government which accounts for ~ 33% of […]
September 18th, 2007 at 9:30 am
[…] This is Class Warfare and to some it is a perfectly legit form of warfare, especially to the ~24% of us who don’t pay income taxes. […]